The Electricity Act 2023 was signed into law by President Bola Tinubu on 8th June, 2023. The Act follows the 5th Alteration of the Constitution of the Federal Republic of Nigeria, which expressly provided full constitutional rights to State Houses of Assembly to make laws for electricity generation, transmission and distribution within their state territories. By virtue of the 5th alteration of the constitution, the regulation of all aspects of distribution and sale of electricity within a State is an exclusive (not residual) right of State Electricity Regulatory Commissions (SERCs).
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Less than two years of its passage, a bill to amend the Electricity Act has passed second reading on the floor of the Senate. The Electricity Act Amendment Bill 2025 is sponsored by Sen. Enyinnaya Abaribe, who is also the chairman of the Senate Committee on Power. It is instructive to note that Sen. Abaribe was a senator in the 9th National Assembly that passed both the Constitutional Amendments and the Electricity Act 2023. Sen. Abaribe served as the Deputy Governor of Abia State from 1999 to 2003.
The stated core objectives of the Electricity Act (Amendment) Bill, 2025 are to amend the Electricity Act, 2023, in order to:
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- Make provision for emerging issues in the Nigerian Electric Power Sector.
- Enhance policy and regulatory coordination.
- Strengthen sectoral financing.
- Protect critical electricity infrastructure.
- Foster industrial relations in the sector.
- Clarify transitional arrangements.
Based on the Electricity Act (Amendment) Bill, 2025, several areas of potential conflict and jurisdictional overlap exist between the Nigerian Electricity Regulatory Commission (NERC) and the newly empowered State Electricity Regulatory Commissions (SERCs). The tension primarily arises from the division of regulatory power over a national grid that services state-level markets.
Here are the key areas of conflict highlighted in the bill:
- Overriding Regulatory Oversight of NERC
The most significant potential for conflict lies in the concept of NERC’s “overriding regulatory oversight.” Section 230C(1)(b) of the bill states that intra-state electricity operations that rely on the national grid system remain subject to the “overriding regulatory oversight of NERC”. This gives NERC direct regulatory jurisdiction over electricity distribution licensees, and any other state electricity licensee operating in SEMs where such licensee has a reliance on the national grid.
- Use of Vague and Ambiguous Terminologies
The bill uses vague and ambiguous terminologies and language; for instance, “reliance on the national grid system”, “operational codes”, “intra-state electricity operations” and “intra-state electricity activity” are a few of the vague and ambiguous terminologies used by the bill.
The term “overriding regulatory oversight” is not explicitly defined by the bill, leaving it open to broad interpretation by NERC. This could lead to jurisdictional disputes where a SERC believes NERC is overstepping its authority in the regulation of the state’s internal market. The ambiguous and vague terminologies are certainly not helpful to the Bill’s core objective of addressing conflict between Federal and State Regulatory Bodies.
- Conflicting Powers over Tariff Design and Implementation
Another area of conflict created by the bill is in tariff design and implementation for electricity distribution. While states are empowered to establish their own electricity markets, the bill strangely allows NERC to retain significant control over tariffs for any state connected to the national grid system. The amended Section 2 grants State Houses of Assembly the power to legislate on their own electricity markets and regulators. However, Section 230C(2) extends NERC’s overriding oversight to “tariffs designs and implementation” for any state market that is reliant on the national grid. This creates a direct conflict. A SERC could set a tariff for its local market, only for NERC to challenge or attempt to override it, citing its authority over the interconnected grid. The issue between Enugu State Electricity Regulatory Commission and MainPower DisCo is a good example of such potential regulatory overreach by NERC under the amendment bill.
The point must be made that SERCs have no authority to design and implement tariffs for generation and transmission on the national grid (national wholesale electricity market). For clarity and contrary to (uninformed) public opinion, EERC did not adjust wholesale generation and transmission tariffs set by NERC for Enugu Electricity Distribution Company (the HoldCo for MainPower).
Furthermore, the bill defines how electricity subsidies under the Power Consumer Assistance Fund (PCAF) would be implemented. However, PCAF as proposed by the bill will distort state tariff methodologies and usurp the powers of SERCs to implement any electricity subsidies within SEMs.
- Dual Authority on Consumer Protection Standards
The amendment bill will create conflicts between federal and state regulators in implementing consumer protection within SEMs. The amended Section 2 lists “consumer protection and anti-trust” as an area where state laws must not conflict with the federal Act, implying NERC’s standards are supreme. Simultaneously, Section 230C(2) explicitly includes consumer protection as part of NERC’s oversight for grid-connected state markets. This is a clear constitutional overreach by the bill and will lead to implementation disputes. For instance, a conflict could easily arise if a SERC attempts to implement a consumer protection regulation that NERC deems either insufficient or in conflict with national standards.
In any case, it is pertinent to ask which consumer is being protected here? Are these customers served by electricity distribution licensees within a SEM? Without any equivocation, implementing consumer protection regulations within a state electricity market should fall under the jurisdiction of the SERC. NERC and the FCCPC may set baseline consumer protection standards, but no federal law should invalidate nor prevent State Houses of Assembly from making laws for consumer protection within their territories.
- Dispute Resolution and the Forum of Regulators
The bill establishes a Forum of Electricity Regulators (FERs) to harmonize regulations between the NWEM and SEMs. However, the bill as drafted seeks to solidify NERC’s supremacy over SERCs under the FER structure. According to Section 228B(d), the forum serves as a platform for settling disputes. Yet, it grants NERC “final administrative appellate jurisdiction” regarding technical disputes involving two or more SERCs or issues that have a bearing on the National Wholesale Electricity Market (NWEM). In this scenario, a SERC may contest a final decision made by NERC, viewing it as an imposition rather than a resolution. There is also an ambiguity on the Forum’s advisory outcomes. Section 228D(4) states that decisions of the FERs are “advisory but shall carry significant weight”. This ambiguity could lead to needless controversy when a SERC ignores an “advisory” decision, creating conflict and undermining the forum’s purpose.
The FER is welcome, but its role should be more of a platform to encourage collaboration between NERC and SERCs, and not a forum empowering NERC with an ambiguous advisory but judicial mandate over SERCs.
- Exclusive Federal Jurisdiction over Technical and Safety Standards Enforcement
The bill establishes the supremacy of federal agencies in setting and enforcing technical standards, which could clash with similar technical standards enforcement functions of State agencies under State electricity laws. Section 230C(2) gives NERC exclusive regulatory jurisdiction over the enforcement of technical standards and operational codes nationwide. Furthermore, Section 230C(3) clarifies that the powers of the Nigerian Electricity Management Services Agency (NEMSA) to enforce technical standards and conduct inspectorate services “shall prevail and apply nationwide”, irrespective of any similar functions being carried out by a state government agency. This could render state-level technical and safety bodies redundant or lead to direct conflict between state and federal inspectorate officials.
One must ask why the drafters of the bill seek to retain NERC and NEMSA’s exclusive role over technical and safety standards in SEMs, in view of the poor implementation and enforcement of such standards in the NESI so far by these two regulatory bodies? In 2024 alone, over 112 Nigerians lost their lives in the Nigerian electricity sector, according to data released by the NERC. Common sense would suggest that the best approach to implement and enforce technical standards within the NESI is for NEMSA to work in collaboration with SERC and other agencies of State government within SEMs.
- Back-door Constitutional Amendment
The 5th Alteration of the 1999 Constitution signed by President Muhammadu Buhari in 2023, removed the restriction on States to make laws for electricity ONLY in areas not covered by the national grid system within their territories. A careful and unbiased reading of sections 230A-C of the amendment bill would highlight a troubling fact that the amendment bill seeks to roll back the 5th alteration of the 1999 Constitution (as amended) by relating intra‑state electricity activities and the regulatory jurisdiction of SERCs within the context of a connection or reliance on the national grid system.
The bill interprets “intra-state electricity activity” as “intra-state generation, transmission, distribution and supply of electricity NOT CONNECTED TO, OR RELIANT ON THE NATIONAL GRID SYSTEM, which shall fall under the exclusive regulatory jurisdiction of relevant SERC upon completion of transfer of regulatory oversight (S.230C(1)(a))”. In section 230C(1)(b), the bill explicitly states that “intra-state operations that involve reliance on any part of the national grid system or other interstate sources of generation, shall remain subject to the overidding regulatory oversight of NERC”.
Consequently, Section 230C(1)(a-b) will roll back the 5th alteration of the 1999 Constitution, hence a back-door amendment of the 1999 Constitution. Additionally, with a commercially oriented NISO in place, there is no a need for NERC to retain any form of regulatory oversight over SubCos and other state electricity licensees that may procure power from the national grid.
Furthermore, the amendment bill defines “State electricity markets” as “the various state electricity markets established pursuant to section 230 of the Principal Act for distribution and retail sale of electricity procured from either state licensed generators or by NWEM”. It must be noted that State Electricity Markets are creations of the State Assembly and not the National Assembly; their establishment aren’t pursuant to the provisions of the Electricity Act 2023. It is most concerning that the drafters of the amendment bill seek to restrict activities in state electricity markets to solely distribution and retailing of electricity.
Summary
The National Assembly is well within its powers to either amend or repeal any of its Acts, and at such a time it deems necessary. However, the Electricity Act amendment bill 2005 as currently drafted, is riddled with constitutional, legal, regulatory and fiscal landmines that would be catastrophic to the Nigerian electricity sector if the bill is passed. I have only highlighted a few of the landmines that relate to the implementation of the SEMs. I urge the Senate and proponents of the bill to have a cautious rethink before passing the bill into law.
Odion Omonfoman is an energy expert and the Lead Consultant on electricity to the Nigeria Governors Forum. He can be reached at [email protected]
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